The Global Environment

and Operations Strategy

2 - 1

Outline

Global Company Profile: Boeing

A Global View of Operations
Cultural and Ethical Issues

Developing Missions And Strategies

Mission
Strategy

2 - 2

Outline Continued

Achieving Competitive Advantage

Through Operations
Competing On Differentiation
Competing On Cost
Competing On Response

Ten Strategic OM Decisions

2 - 3

Outline Continued

Strategy Development and

Implementation
Key Success Factors and Core
Competencies
Build and Staff the Organization
Integrate OM with Other Activities

2 - 4

Outline Continued

Global Operations Strategy

Options
International Strategy
Multidomestic Strategy
Global Strategy
Transnational Strategy

2 - 5

Some Boeing Suppliers (787)

Firm

Country Component

Latecoere

France Passenger doors

Labinel France Wiring

Dassault

France Design and

PLM software

Messier-Bugatti France Electric brakes

Thales France Electrical power

conversion system

and integrated

standby flight display

Messier-Dowty France Landing gear structure
Diehl

Germany

Interior lighting
2 - 6

Some Boeing Suppliers (787)

Firm

Country Component

Cobham

UK

Fuel pumps and valves

Rolls-Royce

UK

Engines

Smiths Aerospace
UK

system

BAE SYSTEMS UK

Central computer

Electronics

Alenia Aeronautics
Italy
Upper center

fuselage &

horizontal stabilizer
Toray Industries
Japan Carbon fiber for

wing and tail units

2 - 7

Some Boeing Suppliers (787)

Firm

Country Component

Fuji Heavy
Industries

Japan

Center wing box

Kawasaki Heavy
Japan Forward fuselage,
Industries
fixed section of wing,

landing gear well

Teijin Seiki

Japan

Hydraulic actuators

Mitsubishi Heavy
Industries

Japan

Wing box

Chengdu Aircraft
Group

China

Rudder

Hafei Aviation

Parts

China

2 - 8

Some Boeing Suppliers (787)

Firm

Country Component

Korean AviationSouth

Korea
Saab

Wingtips

Sweden Cargo access doors

2 - 9

Global Strategies

Boeing sales and production are worldwide

Benetton moves inventory to stores around
the world faster than its competition by building
flexibility into design, production, and
distribution
Sony purchases components from suppliers
in Thailand, Malaysia, and around the world

2 - 10

Global Strategies

Volvo considered a Swedish company but

until recently was controlled by an American
company, Ford. The current Volvo S40 is built in
Belgium and shares its platform with the Mazda
3 built in Japan and the Ford Focus built in
Europe.
Haier A Chinese company, produces
compact refrigerators (it has one-third of the US
market) and wine cabinets (it has half of the US
market) in South Carolina
2 - 11

Some Multinational Corporations

% Sales
Outside
Home Home Home
Company
Country

Citicorp
ColgatePalmolive
Dow USA
Chemical
Gillette
Honda Japan
IBM USA

USA
USA

34
72

46
63

60

50

NA

USA
63
57

62
36
47

53
NA
51

% Assets
Outside
% Foreign
Country

Country

NA
NA

NA

2 - 12

Some Multinational Corporations

% Sales
Outside
Home Home Home
Company
Country

ICI
Britain 78
50
Nestle Switzerland
98
Philips
Netherlands
Electronics
Siemens
Germany
Unilever
Britain &

Netherlands

% Assets
Outside
% Foreign
Country

NA
95
94

97
85

82

51
95

NA
70

38
64

Country

2 - 13

Reasons to Globalize

Reasons to Globalize
Tangible
Reasons

1.Reduce costs (labor, taxes, tariffs, etc.)

2.Improve supply chain
3.Provide better goods and services
4.Understand markets
5.Learn to improve operations
6.Attract and retain global talent

Intangible
Reasons

2 - 14

Reduce Costs
Foreign locations with lower wage rates can lower direct and indirect
costs
Maquiladoras
World Trade Organization (WTO)
North American Free Trade Agreement (NAFTA)
APEC, MERCOSUR, CAFTA
European Union (EU)

2 - 15

Improve the Supply Chain

Locating facilities closer to unique resources

Auto design to California
Athletic shoe production to China
Perfume manufacturing in France

2 - 16

Provide Better Goods

and Services

Objective and subjective characteristics of goods and services

On-time deliveries
Cultural variables
Improved customer service

2 - 17

Understand Markets
Interacting with foreign customers and suppliers can lead to new
opportunities
Cell phone
design from
Europe
Cell phone
fads from
Japan
Extend the product life cycle

2 - 18

Learn to Improve Operations

Remain open to the free flow of ideas

General Motors partnered with a Japanese auto manufacturer to
learn new approaches to production and inventory control
Equipment and layout have been improved using Scandinavian
ergonomic competence

2 - 19

Attract and Retain Global Talent

Offer better employment opportunities

Better growth opportunities and insulation against unemployment
Relocate unneeded personnel to more prosperous locations

2 - 20

Cultural and Ethical Issues

Cultures can be quite different

Attitudes can be quite different towards

Punctuality
Lunch breaks
Environment
Intellectual
property

Thievery
Bribery
Child labor

2 - 21

Companies Want To Consider

National literacy rate
Rate of innovation
Rate of technology
change
Number of skilled workers
Political stability
Product liability laws
Export restrictions
Variations in language

Work ethic
Tax rates
Inflation
Availability of raw
materials
Interest rates
Population
Number of miles of
highway
Phone system

2 - 22

Match Product & Parent

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods

1.Volkswagen
2.Bridgestone
3.Campbell Soup
4.Tata Motors Limited
5.Proctor and Gamble
6.Nestl
7.Pillsbury
8.Sony

2 - 23

Match Product & Parent

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Petfoods

1.Volkswagen
2.Bridgestone
3.Campbell Soup
4.Tata Motors Limited
5.Proctor and Gamble
6.Nestl
7.Pillsbury
8.Sony

2 - 24

Match Product & Country

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Pet Foods

1.Great Britain
2.Germany
3.Japan
4.United States
5.Switzerland
6.India

2 - 25

Match Product & Country

Braun Household
Appliances
Firestone Tires
Godiva Chocolate
Haagen-Dazs Ice
Cream
Jaguar Autos
MGM Movies
Lamborghini Autos
Alpo Pet Foods

1.Great Britain
2.Germany
3.Japan
4.United States
5.Switzerland
6.India

2 - 26

Developing Missions and Strategies

Mission statements tell an

organization where it is going
The Strategy tells the
organization how to get there

2 - 27

Mission

Mission - where are

you going?

Organizations purpose
for being
Answers What do we
provide society?
Provides boundaries and
focus

2 - 28

Merck

The mission of Merck is to provide society with superior products and

servicesinnovations and solutions that improve the quality of life and
satisfy customer needsto provide employees with meaningful work and
advancement opportunities and investors with a superior rate of return.

Figure 2.2
2 - 29

Hard Rock Cafe

Our Mission: To spread the spirit of Rock n Roll by delivering an

exceptional entertainment and dining experience. We are committed to
being an important, contributing member of our community and offering the
Hard Rock family a fun, healthy, and nurturing work environment while
ensuring our long-term success.

Figure 2.2
2 - 30

Arnold Palmer Hospital

Arnold Palmer Hospital for

Children provides state-of-the-art,
family centered healthcare
focused on restoring the joy of
childhood in an environment of
compassion, healing, and hope.

Figure 2.2
2 - 31

Factors Affecting Mission

Philosophy
and Values
Profitability
and Growth

Environment
Mission
Customers

Public Image

Benefit to
Society

2 - 32

Sample Missions

Sample Company Mission

To manufacture and service an innovative, growing, and
profitable worldwide microwave communications business
that exceeds our customers expectations.

Sample Operations Management Mission

To produce products consistent with the companys mission
as the worldwide low-cost manufacturer.

Figure 2.3
2 - 33

Sample Missions

Sample OM
Department
Missions
Product design

To design and produce products and

services with outstanding quality and
inherent customer value.

Quality management

To attain the exceptional value that is

consistent with our company mission and
marketing objectives by close attention to
design, procurement, production, and field
service operations

Process design

To determine, design, and produce the

production process and equipment that will
be compatible with low-cost product, high
quality, and good quality of work life at
economical cost.
Figure 2.3
2 - 34

Sample Missions

Sample OM
Department
Missions
Location

Layout design

Human resources

To locate, design, and build efficient and

economical facilities that will yield high
value to the company, its employees, and the
community.
To achieve, through skill, imagination, and
resourcefulness in layout and work methods,
production effectiveness and efficiency
while supporting a high quality of work life.
To provide a good quality of work life, with
well-designed, safe, rewarding jobs, stable
employment, and equitable pay, in exchange
for outstanding individual contribution from
employees at all levels.
Figure 2.3
2 - 35

Sample Missions

Sample OM
Department
Missions
Supply-chain
management

To collaborate with suppliers to develop

innovative products from stable, effective,
and efficient sources of supply.

Inventory

To achieve low investment in inventory

consistent with high customer service levels
and high facility utilization.

Scheduling

To achieve high levels of throughput and

timely customer delivery through effective
scheduling.

Maintenance

To achieve high utilization of facilities and

equipment by effective preventive
maintenance and prompt repair of facilities
and equipment.
Figure 2.3
2 - 36

Strategic Process

Organizations
Mission

Functional Area
Missions

Marketing

Operations

Finance/
Accounting

2 - 37

Strategy

Action plan to
achieve mission
Functional areas
have strategies
Strategies exploit
opportunities and
strengths, neutralize
threats, and avoid
weaknesses

2 - 38

Strategies for Competitive Advantage

Differentiation better, or at least different

Cost leadership cheaper
Response rapid response

2 - 39

Competing on Differentiation

Uniqueness can go beyond both the physical characteristics and

service attributes to encompass everything that impacts customers
perception of value

Safeskin gloves leading edge products

Walt Disney Magic Kingdom experience differentiation
Hard Rock Cafe dining experience

2 - 40

Competing on Cost

Provide the maximum value as perceived by customer. Does not

imply low quality.

Southwest Airlines secondary airports, no frills

service, efficient utilization of equipment
Wal-Mart small overhead, shrinkage, distribution
costs
Franz Colruyt no bags, low light, no music, doors on
freezers

2 - 41

Competing on Response

Flexibility is matching market changes in

design innovation and volumes
A way of life at Hewlett-Packard

Reliability is meeting schedules

German machine industry

Timeliness is quickness
in design, production,
and delivery
Johnson Electric,
Pizza Hut, Motorola

2 - 42

OMs Contribution to Strategy

10 Operations
Decisions Approach Example

Product
Quality
Process
Location
Layout
Human
resource
Supply chain
Inventory
Scheduling
Maintenance

Competitive
Advantage

DIFFERENTIATION
Innovative design Safeskins innovative gloves
Broad product line
Fidelity Securitys mutual
funds
After-sales service
Caterpillars heavy
equipment service
Experience
Hard Rock Cafs dining experience

COST LEADERSHIP

Low overhead
Franz-Colruyts
warehouse-type stores

Effective capacity

use
Southwest Airlines

aircraft utilization

Inventory

management
Wal Marts sophisticated

distribution system

RESPONSE

Flexibility
world market
Reliability
time
Quickness
at lunchtime

Hewlett-Packards response to volatile

Differentiatio
n
(better)
Response
(faster)

Cost
leadership
(cheaper)

FedExs absolutely, positively, on

Pizza Huts 5-minute guarantee

Figure 2.4
2 - 43

10 Strategic OM Decisions

Goods and service

design
Quality
Process and capacity
design
Location selection
Layout design

1.Human resources
and job design
2.Supply-chain
management
3.Inventory
4.Scheduling
5.Maintenance

2 - 44

Goods and Services and

the 10 OM Decisions

Goods
Operations
Decisions
Goods and Product is
service
usually tangible
design

Services
Product is not
tangible

Quality

Many objective
standards

Many subjective
standards

Process
and
capacity
design

Customers not
involved

Customer may
be directly
involved
Capacity must
match demand
Table 2.1

2 - 45

Goods and Services and

Operations
Decisions
Location
selection
Layout
design

Human
resources
and job
design

the 10 OM Decisions

Goods
Near raw
materials and
labor
Production
efficiency

Services
Near customers

Enhances
product and
production
Technical skills, Interact with
consistent labor
customers, labor
standards, output standards vary
based wages
Table 2.1

2 - 46

Goods and Services and

Operations
Decisions

the 10 OM Decisions

Goods

Services

Supply
chain

Relationship
critical to final
product

Important, but
may not be
critical

Inventory

Raw materials,
work-in-process,
and finished
goods may be
held

Cannot be stored

Scheduling Level schedules

possible

Meet immediate
customer demand
Table 2.1

2 - 47

Goods and Services and

the 10 OM Decisions

Goods
Services
Operations
Decisions
Maintenanc Often preventive Often repair
e
and takes place
and takes place at
at production site customers site

Table 2.1

2 - 48

Managing Global Service Operations

Requires a different perspective

on:
Capacity planning
Location planning
Facilities design and layout
Scheduling

2 - 49

Process Design

High
Moderate
Low

Process-focused
JOB SHOPS
(Print shop, emergency
room, machine shop,
fine-dining
restaurant)

Variety of Products

Low

Repetitive
(modular) focus
ASSEMBLY LINE
(Cars, appliances,
TVs, fast-food
restaurants)

Mass Customization
Customization at
high Volume
(Dell Computers PC,
cafeteria)

Product focused
CONTINUOUS
(Steel, beer,
paper, bread,
institutional
kitchen)

ModerateHigh
Volume
2 - 50

Operations Strategies of Two Drug Companies

Competitive
Advantage

Brand Name Drugs,

Inc.
Product Differentiation

Generic Drug Corp.

Low Cost

Product
Heavy R&D investment; Low R&D investment;
Selection and extensive labs; focus on focus on development
Design
development in a broad of generic drugs
range of drug
categories
Quality

Major priority, exceed

Meets regulatory
regulatory requirements requirements on a
country by country
basis
Table 2.2
2 - 51

Operations Strategies of Two Drug Companies

Competitive
Advantage

Brand Name Drugs,

Inc.
Product Differentiation

Generic Drug Corp.

Low Cost

Process

Product and modular

process; long
production runs in
specialized facilities;
build capacity ahead of
demand

Process focused;
general processes; job
shop approach, shortrun production; focus
on high utilization

Location

Still located in the city

where it was founded

Recently moved to lowtax, low-labor-cost

environment
Table 2.2
2 - 52

Operations Strategies of Two Drug Companies

Competitive
Advantage

Brand Name Drugs,

Inc.
Product Differentiation

Generic Drug Corp.

Low Cost

Scheduling

Centralized production
planning

Many short-run
products complicate
scheduling

Layout

Layout supports
automated productfocused production

Layout supports
process-focused job
shop practices

Table 2.2
2 - 53

Operations Strategies of Two Drug Companies

Competitive
Advantage

Brand Name Drugs,

Inc.
Product Differentiation

Generic Drug Corp.

Low Cost

Human
Resources

Hire the best;

nationwide searches

Very experienced top

executives; other
personnel paid below
industry average

Supply
Chain

Long-term supplier
relationships

Tends to purchase
competitively to find
bargains

Table 2.2
2 - 54

Operations Strategies of Two Drug Companies

Competitive
Advantage
Inventory

Brand Name Drugs,

Inc.
Product Differentiation
High finished goods
inventory to ensure all
demands are met

Maintenance Highly trained staff;

extensive parts
inventory

Generic Drug Corp.

Low Cost
Process focus drives
up work-in-process
inventory; finished
goods inventory tends
to be low
Highly trained staff to
meet changing demand

Table 2.2
2 - 55

Issues In Operations Strategy

Resources view
Value Chain analysis
Porters Five Forces model
Operating in a system with many external factors
Constant change

2 - 56

Product Life Cycle

Introduction

GrowthMaturity

Decline

Best period to
increase market
share

Practical to
change price or
quality image

Poor time to
change image,
price, or quality

R&D engineering
is critical

Strengthen niche

Competitive costs
become critical
Defend market
position

Internet search
engines
iPods
LCD &
Xbox 360
plasma TVs

Sale
s

Avatar
s
Boeing
787
Twitter

Company Strategy/Issues

Cost control
critical

Drivethrough
restaurants
CD-ROMs

Analog
TVs
Figure 2.5
2 - 57

Product Life Cycle

Introduction
Product design
and
development
critical
Frequent
product and
process design
changes
Short
production runs
High production
costs
Limited models
Attention to
quality

GrowthMaturity
Forecasting
critical
Product and
process
reliability
Competitive
product
improvements
and options
Increase
capacity
Shift toward
product focus
Enhance
distribution

OM Strategy/Issues

Decline

Standardization
Fewer product
changes, more
minor changes
Optimum
capacity
Increasing
stability of
process
Long production
runs
Product
improvement
and cost cutting

Little
product
differentiation
Cost
minimization
Overcapacity
in the
industry
Prune line to
eliminate
items not
returning
good margin
Reduce
capacity

Figure 2.5
2 - 58

SWOT Analysis

Mission

Internal
Strengths

External
Opportunities
Analysis

Internal
Weaknesses

External
Threats
Strategy

2 - 59

Strategy Development Process

Analyze the Environment

Identify the strengths, weaknesses, opportunities, and threats.

Understand the environment, customers, industry, and competitors.

Determine the Corporate Mission

State the reason for the firms existence and identify the
value it wishes to create.

Form a Strategy

Build a competitive advantage, such as low price, design, or

volume flexibility, quality, quick delivery, dependability, after-sale
service, broad product lines.
Figure 2.6
2 - 60

Strategy Development and Implementation

Identify key success factors

Build and staff the organization
Integrate OM with other activities

The operations managers job is to

implement an OM strategy, provide
competitive advantage, and increase
productivity
2 - 61

Key Success Factors

Support a Core Competence and Implement Strategy by
Identifying and Executing the Key Success Factors in the Functional Areas

Marketing
Service
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)

Decisions
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
Maintenance

Finance/Accounting

Production/Operations

Leverage
Cost of capital
Working capital
Receivables
Payables
Financial control
Lines of credit

Sample Options
Customized, or standardized
Define customer expectations and how to achieve them
Facility size, technology, capacity
Near supplier or near customer
Work cells or assembly line
Specialized or enriched jobs
Single or multiple suppliers
When to reorder, how much to keep on hand
Stable or fluctuating production rate
Repair as required or preventive maintenance

Chapter
5
6, S6
7, S7
8
9
10
11, S11
12, 14, 16
13, 15
17

Figure 2.72 - 62

Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees

Short Haul, Point-toPoint Routes, Often to

Secondary Airports
Competitive Advantage:
Low Cost

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 63

Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
Lean,
Productive
Employees

Short Haul, Point-toPoint Routes, Often to

Automated ticketing machines Secondary Airports
No seat assignments
Competitive
Advantage:
No baggage
transfers
Low Cost
No meals (peanuts)

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 64

Activity Mapping at
Southwest Airlines
Courteous, but
Limited Passenger
Service
No meals (peanuts)

Lower gate costs at secondary

Lean,
airports
Productive
High number of flights reduces
Employees
employee idle time between flights

Short Haul, Point-toPoint Routes, Often to

Secondary Airports

Competitive Advantage:
Low Cost

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 65

Activity Mapping at
Southwest Airlines
High number ofCourteous,
flights reduces
but
employee idle time
between
flights
Limited
Passenger
Saturate a city with flights,
lowering
Service
administrative costs (advertising, HR,
etc.) per passenger for that city
Lean,
Pilot training required on only one
Productive
type of aircraft
Employees
Reduced maintenance inventory
required because
of only one
type of
Competitive
Advantage:
aircraftLow Cost

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Short Haul, Point-toPoint Routes, Often to

Secondary Airports

Frequent,
Reliable
Schedules

Figure 2.8
2 - 66

Activity Mapping at
Southwest Airlines

Lean,
Productive
Employees

Pilot training required on only one

type of aircraft
Courteous,
but
Reduced
maintenance
inventory
Limited
Passenger
required because
of only one type of
Service
aircraft
Excellent supplier relations with
Short Haul, Point-toBoeing has aided financing

Point Routes, Often to

Secondary Airports

Competitive Advantage:
Low Cost

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 67

Activity Mapping at
Southwest Airlines
Courteous, but
Limited
Passenger
Reduced
maintenance inventory
Service
required
because of only one type of
Lean,
Productive
Flexible
union
Employees
contracts

High
Aircraft
Utilization

aircraft
Flexible employees and Short
standard
Haul, Point-toplanes aid scheduling
Point Routes, Often to
Maintenance personnel trained
only Airports
Secondary
one type of aircraft
20-minute
gate turnarounds
Competitive
Advantage:
Low Cost

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 68

Activity Mapping at
Southwest Airlines

Lean,
Productive
Employees

Automated ticketing machines

Empowered
Courteous,
but employees
High Passenger
employee compensation
Limited
Hire
for attitude, then train
Service
High level of stock ownership
High number of flights reduces
Short Haul, Point-toemployee idle time between flights

Point Routes, Often to

Secondary Airports

Competitive Advantage:
Low Cost

High
Aircraft
Utilization

Standardized
Fleet of Boeing
737 Aircraft

Frequent,
Reliable
Schedules

Figure 2.8
2 - 69

Four International Operations Strategies

High

International
Strategy
Import/export or
license existing
product

Figure 2.9

Examples

U.S. Steel

Harley Davidson
Cost Reduction Considerations
Low
Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 70

Four International Operations Strategies

High

Figure 2.9

International Strategy
Import/export or
license existing
product

Cost Reduction
Low

Examples

U.S.
Steel
Considerations

Harley
Davidson

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 71

Four International Operations Strategies

Global
Strategy
Standardized
product
Economies of scale
Cross-cultural
learning

High

Figure 2.9

International Strategy

Import/export or
Examples
license existing
product Texas
Examples
Instruments

U.S.
Steel
Cost Reduction Considerations

Caterpillar
Harley
Low
Davidson

Otis Elevator

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 72

Four International Operations Strategies

High

Figure 2.9
Global Strategy
Standardized product
Economies of scale
Cross-cultural learning
Examples:

Texas Instruments

Caterpillar

Otis Elevator

International Strategy
Import/export or
license existing
product

Cost Reduction
Low

Examples

U.S.
Steel
Considerations

Harley
Davidson

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 73

Four International Operations Strategies

Multidomestic
Strategy
Global Strategy
Use
existing
Standardized product
Economies
of scale
domestic
model
Cross-cultural learning
globally
Examples:

Texas Instruments
Franchise,
joint

Caterpillar

Otis Elevator
ventures,
subsidiaries

High

Figure 2.9

Examples
Import/export or

Heinz
license
existing
product

McDonalds
Examples

U.S.
The Body Shop
Steel
Cost Reduction Considerations

Harley
Hard Rock Cafe
Low
Davidson
International Strategy

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 74

Four International Operations Strategies

High

Figure 2.9
Global Strategy
Standardized product
Economies of scale
Cross-cultural learning
Examples:

Texas Instruments

Caterpillar

Otis Elevator

International Strategy
Import/export or
license existing
product

Cost Reduction
Low

Examples

U.S.
Steel
Considerations

Harley
Davidson

Multidomestic Strategy
Use existing
domestic model globally
Franchise, joint ventures,
subsidiaries
Examples

Heinz
The
Body Shop

McDonalds Hard
Rock Cafe

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 75

Four International Operations Strategies

Transnational
Strategy
Global Strategy
Standardized product
Move
Economies
of scalematerial,
Cross-cultural learning
people, ideas across
Examples:
boundaries
national
Texas Instruments

Caterpillar
Economies
Otis Elevator
of scale
Cross-cultural Multidomestic Strategy
International
Strategy
learning
Use existing

High

Import/export or
license existing
product

domestic model globally

Franchise, joint ventures,
subsidiaries

Examples
Examples
Examples
Coca-Cola

U.S.
Body Shop
Cost Reduction Considerations
Steel
Nestl

Harley
Low

Davidson

Figure 2.9

Heinz

The

McDonalds Hard

Rock Cafe

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 76

Four International Operations Strategies

High

Figure 2.9
Global Strategy
Standardized product
Economies of scale
Cross-cultural learning

Move material, people, ideas

across national boundaries
Economies of scale
Cross-cultural learning

Examples:

Texas Instruments

Caterpillar

Otis Elevator

Examples

Coca-Cola

Nestl

International Strategy
Import/export or
license existing
product

Cost Reduction
Low

Transnational Strategy

Examples

U.S.
Steel
Considerations

Harley
Davidson

Multidomestic Strategy
Use existing
domestic model globally
Franchise, joint ventures,
subsidiaries
Examples

Heinz
The
Body Shop

McDonalds Hard
Rock Cafe

Low

High

Local Responsiveness Considerations

(Quick Response and/or Differentiation)
2 - 77

Ranking Corruption

Rank
1
2
3
5
8
12
14
17
19
37
39
56
79
89
146

Country
2009 CPI Score (out of 10)
New Zealand 9.4
Least
Denmark
9.3
Corrupt
Singapore, Sweden
9.2
Switzerland
9.0
Australia, Canada, Iceland
8.7
Hong Kong
8.2
Germany
8.0
Japan, UK
7.7
USA 7.5
Taiwan 5.6
South Korea 5.5
Malaysia
4.5
China 3.6
Most
Corrupt
Mexico 3.3
Russia 2.2
2 - 78